All Forum Posts by: John Morgan

I have one LLC for my six SFRs. Pretty easy to do and keeps my personal assets safe. If something happens and they see you have an LLC, they most likely will back off from suing you. I've never heard of someone with an LLC getting sued. If so, I'm sure it's very rare.

An average of $200 per SFR for me. That's with 20% down, with 15 year loans and purchased within the last two years. I'm doing a rehab now that should net me $800/month when it's completed and rented at market rate in a sec 8 housing area.

I did something very similar to this. Bought a SFH two years ago for 225k. Put 90k down on it. Cash flowing only $200/month on a 15 year loan. No regrets, but I could have found a higher cash flowing property for sure. I like this place and the location. I invest in RE for fun. It's not all about making a killing in profit for me. I think it'll appreciate just fine and when it's paid off I'll be cash flowing $1,200/month. I can live with that.

I’m only 4 years into real estate investing and have a wife who is still skeptical about this type of investing. She thinks it’s too risky and doesn’t like when I have to drop 2k-5k into my rentals occasionally when things break. I’m cash flowing about $2,500/month off them now. Not bad, not great. It’ll take awhile until I can quit my job and live off the passive income.

Don’t listen to the gurus or waste your money on those rip off classes. Go to their free seminars they have when they come to town. Bring your wife. You’ll learn something every time. They explain how you can get rich off real estate and motivate you to get started. But don’t buy their weekend courses. You can get better educated here off bigger pockets and their podcasts.

My advice is go for base hits in this game. Don’t swing for the fences and take giant risks. You’ll get burned. Ease into it with one property and learn from it all. Take your time. That’s what I did, then I got more aggressive after a few years of learning and sitting back. When my loans are all paid off in 12 years, I’ll be bringing in only 6k/month after all my expenses. Nothing exciting, but it’ll help supplement my retirement. Don’t think you’ll be replacing your income in just a few years. It takes time...unless you started off buying properties for dirt cheap prices around 2012 or 2013. Most of us didn’t start then. And it’s not a huge cash flowing business the first few years of owning real estate. Good luck and enjoy the ride!

@Greg Gibson

I started out with a couple short term rentals like you did four years ago. I was only getting about 10% ROI with mine so I sold one and did a 1031 exchange for a SFR in my area. That got my feet wet and I wanted to buy more. Shortly after, I found a nice flipped 3-1 SFR for 100k which I put 20k down. It only rents for $1,050/month but the demand is high and I'm making about 14% ROI. Nothing great, but it's been appreciating about 15% a year since I bought it which doesn't hurt. Good luck! People told me the housing market was about to pop and not to buy. I've been hearing that for 3 years and it keeps going up like crazy here in north Texas. Will it cool off and crash soon? I don't see anything drastic happening other than higher end homes cooling off. Demand for cheap rentals will cash flow you just find as long as you're prepared to lower rent if we do having a housing burst. Vacation short term rentals? I'm not too sure about that. I'm a little worried about mine if it does cool off. But that's why I paid cash for it, just for that reason.

@Alexander Churchill

You’re young and the interest rate at 5% isn’t bad. I would not pay it off and stock pile cash for more opportunities when things slow down. You’ll be happy you had a big cash reserve for emergencies or future purchases vs putting all that cash into paying them off and having equity in them.

@Raden Mantuano

I'm a newbie too and totally get your enthusiasm. 5 out of the 6 properties I bought had major things break on them in the first year. Talk about Murphy's law! I won't get into details about what broke or about tenants moving out with damage to a property etc. But I took a major hit and probably won't make money on them for five years or more if you factor in what I spent on each SFH.

You always expect things to break down and better have 10k in cash reserves for each house for when things break. Fortunately I did have a cash reserve for this but I spent on average 10k per house. Over a five week period last summer I spent over 33k on four of the properties. It’ll take me years to recoup based on cash flowing only $300/month per property off 15 year loans.

Just have plenty of dough available to pay for maintenance and unexpected things breaking. And realize once a pipe bursts, foundation settles, HVAC goes out, roof needs replacement, tenant stops paying and ruined the carpet and walls, appliance goes out, pest control for rodents and squirrels out of the attic, landscaping dies because tenant doesn’t water or take care of it, window breaks, house catches on fire because a dryer overheated, tree limb falls causing damage to a roof, plumbing leaks inside walls of the house and the list goes on. I expect just about all these things to happen at some point. Which they did within 18 months of buying the properties. That’s part of being a landlord. But have a ton of cash sitting in the bank so you can pay for it when it happens. And expect a few of these things to add up to thousands of dollars spent, while the rent stays about the same or goes up a little over time. One major expense can wipe out a decade of your cash flow. Especially if you’re not doing a traditional mortgage where principle is being knocked off the loan each month. Maybe the housing market will go up and you make a huge profit, but if it doesn’t you’re kind of screwed.

@Jess White

Landlord provides the fridge, tenants provide the W&Ds. That’s how most people I know in Texas do it at least.

@Alex Mendoza

I'm in north Texas too. Competitive market out here with lots of real estate investors snapping up properties with cash. I bought a flipped 3-1 SFH in Arlington off the MLS that was reduced two times a year ago for 100k with 20k down. Rent is $1,050 and that's about as good as I could find in the Dfw area. I also bought an old beater in ft worth for 48k in sept. Had to pay cash for that though. Both of these properties had tenants in place so that's what I go for. Less hassle of trying to get rehabs done quick. You still have rent coming in and somebody else is paying the utilities. Then I fix them up if needed. The one in ft worth I'm raising the rent to $1,200/month after I put in an HVAC system this week.

@Ali Boone

You don't get taxed putting $ in the front end of a Roth IRA. Well, technically the money you take home from a paycheck is taxed so any money you make has been already taxed. When you take your money out at 59 1/2 from a Roth you don't get taxed at all. That's why this is such a good deal. Everyone should load up on a Roth IRA and do the maximum amount per year of 6k if you can swing it.

You can also take whatever amount you put in (the basis) at any time for any reason. So I recommend using a Roth as an emergency fund. In the meantime, invest in stocks and let that money grow in that Roth IRA. It'll do much better than having it waste away in a savings account barely earning any interest.

And if you want to grab a chunk of it like I did to buy real estate, you can without paying any taxes as long as your not taking out any more than you’ve put into it over the years.